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BACKGROUND
Long-term care spending for older adults will reach a projected $135 billion in 2004 (Congressional Budget Office, 2004). Medicaid is the largest payer, accounting for 35% of spending, followed by out-of-pocket payments (33%) and Medicare (25%). Private long-term care insurance pays for about 4% of services, while other sources pay for the remaining 3%. Despite consumer preferences to remain at home, nursing homes serve more than 1.6 million people, the vast majority of whom (90.2%) are over 65 years of age (Jones, 2002). As the number of people over age 85 continues to rise, public spending for community care has increased and nursing home occupancy rates have declined. Nursing home occupancy rates declined from 92% in 1985 to 86.6% in 1999 (Jones, 2002) and 85.6% in 2003 (American Health Care Association, 2004). An analysis of occupancy trends from 1987 to 1996 by the Agency for Healthcare Research and Quality (Rhoades & Krauss, 1999) attributed the decline to the availability of services in alternative settings, such as a person's home, adult family care, and assisted living facilities. As more people remain in or return to community settings, the residents who remain in nursing homes are older and more dependent.
Consumer preferences for community care and state goals to meet those preferences and control costs have produced significant shifts in state policy. Coleman (1998) noted that more states are combining the financing and organization of long- term care delivery systems to shift funds from nursing homes to community services. Coleman (1996) also reported that states are using multiple strategies to create more balanced systems, including limiting the supply of nursing homes, expanding home and community-based services (HCBS), reorganizing state agencies to centralize responsibilities for allocating resources, creating single-entrypoint delivery systems, and increasing coverage for services in residential settings.
In addition to those pertaining to Medicaid funding, other federal laws affect state long-term care policies and practices. The Americans with Disabilities Act (ADA) has a significant impact on efforts to provide access to quality, affordable, and accessible services in community settings. In 1999, the U.S. Supreme Court (Olmstead v. LC., 527 U.S. 581) found that people with disabilities have a right to receive publicly funded services in the most integrated setting. The ADA requires that public...